Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Forum Articles Highlights TMI Notes SMS News What's New Calendar Imp. Links Database More...
Extracts
Home List
← Previous Next →

ITO, 9 (2) (2) , Mumbai Versus M/s Kanakiya Gruhnirman Pvt. Ltd.

Taxing the rental income under the head income from house property as against income from other sources - Allowance of interest expenditure - Held that:- In this case IOD was issued in relation to the plan that was put up on 25. 8. 2006 i. e. after entering into the development agreement. The fact is confirmed from the IOD dated 10. 1. 2007 and CC dt. 24. 4. 2007. It is found that amended plan was put up on 21. 2. 2007 and was approved on 8. 3. 2007, that construction work started in earlier ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ere not provided to the assessee though the same were relied upon by the AO, that as on 12. 4. 2008 two floors of the school building were complete. It is also found that in the case of BKF the AO has mentioned that the trust was conducting schools at Mira Road and Chembur, that there is no doubt that BKF was deducting tax at source on payment of rent to the Assessee. The AO has mentioned that instead of occupying the building the assessee might have utilised some other premises for running the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

BR> Allowance of expenses on account of improvement of leased premises - Held that:- We find that the assessee had installed various items as per the mutual agreement entered into with the lessee, that the amount was capitalised. We have, in the earlier part of the order, held that rental income was to be assessed u/s. 22 of the Act. Therefore, we agree with the observation of the FAA that capitalisation will not make any difference.- Decided against revenue.

Allowance of expenses on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e AO. In our opinion, the addition had to be restricted to the four entities who had taken the accommodation entries. As the AO has not brought on record that purchases made by the assessee were part of bogus bill transactions, so we are of the opinion that FAA was justified in deleting the addition with regard to addition made under the head bogus purchases as well as the proportionate interest disallowance - Decided against revenue.

Addition made on account of accommodation entries .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ty in question, that the advances were given out of the funds received by the assessee from one of the group concerns namely Kanakia Spaces Pvt. Ltd., and it did not charge any interest from the assessee. Therefore, in our opinion disallowance was rightly deleted by the FAA - Decided against revenue. - ITA No. 853/Mum/2013 - Dated:- 30-10-2015 - Rajendra, AM And Beena Pillai, JM For the Appellant : Shri Vijay Mehta For the Respondent : Shri Sujit Bangar ORDER Per Rajendra, AM Challenging the ord .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ty as against income from other sources as well as allowance of interest expendi-ture of ₹ 3. 26 crores. During the assessment proceedings, the AO found that vide agreement, dated 11. 8. 2006, the assessee had acquired development rights in respect of a plot of land situated at Govandi, Chembur, that an irrevocable general power of attorney was also executed in respect of the said land, that the plot of land was reserved for construction of school and play ground, that approval in respect .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

th BKFfor giving school building on rental basis, that in July 2007 part possession of the school building i. e. upto second floor was given to the said trust, that at that time it was decided to charge rent of ₹ 2. 00 lacs per month for 9 months, that the assessee had shown rental income, amounting to ₹ 18. 00 lacs under the head income from house property u/s. 22 of the Act, that the assessee had taken secured loans as well as unsecured loans for construction of school building, th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d the same was issued on 22. 11. 2007, that the amended IOD, in the name of trust, was in continuation of original approval of 10. 1. 2007, that the amended Commencement Certificate (CC) dated 28. 12. 2007 was in continuation of the original CC dated 24. 4. 07, that vide its letter dt. 23. 1. 2008 it applied for Occupation Certificate (OC) in respect of the school building, that the assessee received ₹ 4. 13 crores from the trust, that it paid interest of ₹ 1. 49 crores on secured lo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d an explanation in that regard. The AO held that the OC was not granted till 31. 3. 2009, that the building did not exist on that date, that the assessee was granted permission to develop the school premises much later than the rent agreement with BKF was entered into, that the constructed building area mentioned in the agreement was much more than the actual proposed plan, that IOD was issued in the name of the original land holder, that IOD dt. 22. 11. 2007 was not the permission for developm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

appropriate authority to operate the school, that no major expenses were capitalized with the building, that labour charges were incurred before 31. 7. 2008, that same were found to be spread over throughout the year. Finally, he held that the income arising to the assessee was to be taxed under the head income from other sources. He also held that the interest amounting to ₹ 3. 26 crores was not allowed. 2. 1. Aggrieved by the assessment order the assessee filed an appeal before the Firs .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

8377; 10. 53 crores, that the P&L A/c. as on 31. 3. 2008 showed further expenses incurred till 31. 3. 2008, that the file number of approvals such as IOD, CC remained the same throughout, that the contention of the AO with regard to invalidity of IOD and CC was not correct, that the certificate of architecture proved that as on 12. 4. 2004 work up to the 2nd floor of the school was completed in all aspects and RCC work upto 7th Floor was also complete. The FAA perused the number of students .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ng school at Chembur, that there was no basis to hold that school might have functioned from other building, that the details about the students, results, correspondence, deduction of tax at source etc. proved that the school had started functioning during the year under consideration, that the income received by the assessee was to be taxed under the head income from house property. He also held that proportionate interest of ₹ 3. 26 crores u/s. 24 of the Act, claimed by the assessee was .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es. We find that in this case IOD was issued in relation to the plan that was put up on 25. 8. 2006 i. e. after entering into the development agreement. The fact is confirmed from the IOD dated 10. 1. 2007 and CC dt. 24. 4. 2007. It is found that amended plan was put up on 21. 2. 2007 and was approved on 8. 3. 2007, that construction work started in earlier assessment year and expenses were shown in the books of account from that year, that total expenditure incurred till 31. 3. 2007 was of S .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e complete. It is also found that in the case of BKF the AO has mentioned that the trust was conducting schools at Mira Road and Chembur, that there is no doubt that BKF was deducting tax at source on payment of rent to the Assessee. The AO has mentioned that instead of occupying the building the assessee might have utilised some other premises for running the school. We do not find any reason fir arriving at the said inference. The evidences produced before the FAA about admission of students a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1. 92 crores on account of improvement of leased premises. During the assessment proceedings, the AO found that as per the lease agreement the cost of improvement such as furniture and fixture and basic infrastructure to run the school were required to be incurred by the school, that it was the responsibility of the school to purchase and install the same so as to make it operational, that cost of airconditioners, computers, printers, generators etc. were no to be incurred by the assessee, it w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

talised in the AY. 09-10, that same had to be reduced from the capital investment, thus, he fixed revised capital investment at ₹ 40. 17 crores. He disallowed proportionate interest of ₹ 19, 72, 594/- also. 3. 1. Before the FAA, the assessee contended that only dispute was regarding the requirement of the assessee to incur the expenditure, that there was delay in completion of the project, that the school was occupied by the lessee party, that it was mutually agreed that the assessee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that the rental income was to be assessed under the head income from house property, that the capitalisation would not make any difference. Finally, he allowed the appeal filed by the assessee. 3. 2. Before us, the DR supported the order of the AO and the AR supported the order of the FAA. We have heard the rival submissions and perused the material before us. We find that the assessee had installed various items as per the mutual agreement entered into with the lessee, that the amount was capi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

an action u/s. 132(1) of the Act was carried out in the Kanakia Group of cases on 29. 3. 2011, that enquiries conducted after the search operation revealed that it had taken accommodation bills, that Kanakia group had declared an amount ₹ 42 crores towards bogus purchases for the AYs 2006-07, 2011-12 u/s. 132(4) of the Act, that the said disclosure was made in the hands of four group companies. The AO during the assessment proceedings, recorded statement of Girish Sangani u/s. 131 of the A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the AO had not provided a copy of the statement of Girish Sangani that was relied upon by him to make the addition, that Girish Sanganihad nowhere referred its name when statements were recorded, that no accommodation entries were provided to the assessee, that the statement of Rakesh Kanakia who had made admission u/s. 132(4) also did not refer the name of the assessee, that it had filed entire details of transaction alongwith the bills and supporting evidence to prove that purchase were genui .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

four entities, that out of such total purchase of goods worth ₹ 6. 38 crores were admitted to be bogus both by the purchaser and the seller, that the rest of the purchases were found to be genuine, that the search party had also not pointed about anything wrong with the purchases made with the assessee, that without some concete evidence the AO was not justified in disallowing the purchase. 4. 2. Before us, the DR and the AR supported the order of AO and the FAA respectively. We find that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

who had taken the accommodation entries. As the AO has not brought on record that purchases made by the assessee were part of bogus bill transactions, so we are of the opinion that FAA was justified in deleting the addition with regard to addition made under the head bogus purchases as well as the proportionate interest disallowance. Upholding his order, Ground No. 4 is decided against the AO. 5. Next ground is about deleting the addition made on account of accommodation entries amounting to &# .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cretion of the bench and the AR supported the order of the FAA. While deciding ground no. 4, we have held that the AO was not justified in making the addition for alleged accommodation entries in case of the assessee. Following the same we uphold the order of the FAA and dismiss Ground No. 5, filed by the AO. 6. Last ground of appeal is about allowing the proportionate interest expenses of ₹ 80, 69, 115/- related to advances made towards Juhu land. During the assessment proceeding AO found .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

  ↓     Latest Happening     ↓  

Highlight: Sharing of expenses - BAS - promotion of business of group companies - sharing of expenditure for common facilities cannot be treated as service by one to another in such arrangement.

Forum: Cess paid instead of SGST

Forum: import purchase

News: RBI Reference Rate for US $

Forum: 3B mistake

Forum: Input credit of gst paid on urd

Article: Credit of unsold stock [Section 140(3)] - Actual Credit as well as Notional Credit - Part-I - GST Transitional provisions

Circular: Certain Clarifications sought on Construction Services provided in the Real Estate Sector reg.

Forum: transfer of shares

Forum: Input tax credit

News: Anti-dumping duty on import of bus/truck tyres from China

News: Fast-track GST refund, else ₹ 65K cr may be stuck: Exporters

Highlight: It is open to the Settlement Commission to use best judgment in arrival of the figure. Nonetheless it has to explain the manner in which the best judgment figure has been arrived at by the Settlement Commission - HC

Highlight: Deemed dividend u/s 2(22)(e) - advances given to societies - in the absence of legal right of the assessee in the said society the amount advanced cannot be treated as deemed income.

Highlight: When electrical installations are treated as plant and machinery the depreciation has to be allowed @ 25% as per provisions contained u/s 32

Forum: GST return filing software online | Easy GST compliance management

TMI Note: Capital Gain - transfer of right in the land or transfer of land itself - addition u/s 50C - Harassment to the honest tax payers

Highlight: Option to avail composition scheme under GST by electronically filing an intimation in FORM GST CMP-02 and FORM GST ITC-03 upto 30-9-2017 - See Rule 3(3A)

TMI Note: Does ICDS apply for the purposes of computing exemption u/s 11 to 13.

Highlight: Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

TMI Note: Certain ICDS provisions are inconsistent with judicial precedents. Whether these judicial precedents would prevail over ICDS.

Highlight: Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

News: Voluntary Reporting of Estimated Current Income and Advance Tax Liability

TMI Note: In case of conflict between ICDS and other specific provisions of the Income-tax rules, 1962 governing taxation of income like rules 9A, 9B etc. of the Rules, which provisions shall prevail.

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC

Highlight: Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society

News: Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 comments and suggestions-reg.

Highlight: Genuineness of labour wages expenses, embroidery charges, fabrication expenses etc. - getting work done through small workmen who do not have any permanent place of residence - disallowance of ad hoc expenditure deleted.

Highlight: Project import - Since the goods were never used for the purpose for which it was imported, the actual user condition has been violated - Redemption fine and penalty imposed.

Highlight: Penalty u/s 112 (a) - CHA - Lack of due diligence and failure to take more precautions can not, by itself, bring in penal consequences

Highlight: Import of services - GST - The fact that those services were received outside India will not change the fact that the services have been paid for by the beneficiary appellant, who is located in India. - Demand confirmed.

Notification: SEZ for IT/ITES at Madhurwada Village, Visakhapatnam District in the State of Andhra Pradesh - denotified.

Highlight: Merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange.

Highlight: Merely vehicle numbers was not mentioned on the invoices cannot be the reason to deny Cenvat Credit

Highlight: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017 - Circular

Circular: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017

News: Auction for Sale (Re-issue) of Government Stocks



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version